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Bank of Uganda launches regulatory sandbox to improve the startup ecosystem

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  • The Bank of Uganda has launched a Regulatory Sandbox Framework to encourage the use of electronic payments
  • Under the Sandbox arrangement, Wave Transfer Ltd has been given permission to test Quick Response technology
  • Mr. Mutebile encourages more companies to develop and test financial innovations in the regulatory Sandbox

The Bank of Uganda has launched the Regulatory Sandbox Framework in an effort to strengthen Uganda’s startup ecosystem. The framework is a set of rules and requirements that allow innovative financial solutions, such as fintech startups, to be tested in a live controlled environment under BoU’s supervision and with the necessary safeguards in place. This is a huge step forward for Ugandan startups and young innovators. According to an official press release, the regulatory sandbox will be overseen by the Bank of Uganda (Central Bank of Uganda) and subject to the necessary safeguards.

Uganda’s efforts to increase adoption of electronic payments

Wave Transfer Limited, a financial technology firm based in Uganda, is the first to be admitted to the regulatory sandbox. On April 12, 2021, the company received BoU approval to operate under the Regulatory Sandbox Framework. Wave Transfer is putting its Quick Response (QR) technology through its paces in a lab setting. According to the Bank of Uganda, more firms are being invited to develop and test financial innovations in the regulatory sandbox.

Uganda’s regulatory sandbox aims to promote financial innovation and attract funding for Fintech startups in the country. This programme is also seen as a learning opportunity for innovators and regulators across the country. In addition, the country plans to increase the use of electronic payments and digital financial services, as well as promote financial inclusion in East Africa.

With the launch of the regulatory sandbox by the Bank of Uganda, more opportunities are on the horizon

Startups can apply to be integrated into Bank of Uganda structures or to be extended for a longer period of time. This will set you back UGX 5 million. 

Because startups are perceived as trustworthy by investors when they work in a controlled environment, they have more opportunities. It also allows startups to learn and grow in a less risky environment than if they were operating in an unregulated environment with no rules. The Bank of Uganda has launched a regulatory sandbox that will provide these startups with resources such as mentorship and coaching. Partnerships between startups are also a possibility.

On April 12, 2021, Wave Transfer Limited was granted permission to test Quick Response technology under the Sandbox arrangement. Under the Regulatory Sandbox, the Bank of Uganda invites more businesses to develop and test financial innovations.

In East Africa, Kenya is a leader in financial innovation. The country’s regulatory sandbox was launched in March 2019 with the goal of promoting technological innovation in the capital markets. Since its inception, the sandbox has accepted seven companies. Kenya’s Capital Markets Authority (CMA) has taken additional steps to unlock the Fintech space’s potential by signing agreements with well-known regulatory bodies such as the Australian Securities and Investments Commission and the Abu Dhabi Global Markets (ADGM) Financial Services Regulatory Authority.

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